Nvidia reports solid Q3, stock down as guidance underwhelms lofty expectations

Nvidia reported fiscal third-quarter results that topped Wall Street estimates, but its current-quarter guidance underwhelmed lofty investor expectations amid red-hot AI demand.

NVIDIA Corporation (NASDAQ:NVDA ) shares fell more than 2% in after-hours trade following the report.

The company announced Q3 earnings per share of $0.81 on revenue of $35.1B. Analysts polled by Investing.com anticipated EPS of $0.75 on revenue of $33.09B

Data center revenue was $30.8B, up 17% from Q2 and up 112% from a year ago. That compared with estimates for $28.84B.

Looking ahead to Q4, revenue is expected to be $37.5B, plus or minus 2%, compared with estimates of $37.09B.

GAAP gross margins were expected to be 73.0%, plus or minus 50 basis points.

Commenting on the print, Bank of America analysts said they "expect [the] stock to churn near-term as investors digest lack of “sizzle” but we continue to like the stock on its “substance”.

They note that Nvidia remains the fastest-growing mega-cap company and the undisputed leader in converting $1 trillion of legacy infrastructure to accelerated systems, and continues to generate solid free cash flow (FCF).

Separately, Piper Sandler analysts said Nvidia's report, despite missing elevated guidance expectations, sets up the chipmaker "for extremely strong growth starting in April."

"The key here is that NVDA is going through a product transition with Blackwell ramping and H200 remaining strong," analysts led by Harsh V. Kumar wrote.

"We also continue to believe that starting April, the beat cadence will be quite a bit higher than the $2B cadence NVDA has more or less maintained thus far," they added.

Nvidia's Blackwell AI chips, which some believe represent the next frontier for the company, are expected to face supply constraints amid red-hot demand.

"Both Hopper and Blackwell systems have certain supply constraints, and the demand for Blackwell is expected to exceed supply for several quarters in fiscal 2026," Nvidia said on Wednesday.

Yasin Ebrahim contributed to this report. 

Source: Investing.com